Answer:
Net Present Value = $22,815 - $22,000 = $815
Since the value is positive the project shall be accepted.
Explanation:
Cost of project = $22,000
That is initial outflow.
Cash inflow = $5,000 each for 7 years.
Expected rate of return for 7 years = 12%
Therefore, Present value of $1 for 7 years @ 12% = 4.563
Therefore, Cumulative present value of cash flow = $5,000 4.563 = $22,815.
Net Present Value = $22,815 - $22,000 = $815
Since the value is positive the project shall be accepted.